CJZ boss calls for a clampdown on Australians using VPNs to access content

The boss of one of Australia’s most prominent independent production houses has argued the government should tighten up regulations around Australians accessing content from overseas using virtual private networks (VPNs) as it is hurting the production sector.

Cordell Jigsaw Zapruder managing director Nick Murray told Mumbrella the current arrangements are only benefitting international players like Netflix because under the current production deals content is sold by territories.

Asked if it should be illegal for Australians to access overseas platforms using a VPN he said: “It should be. It should absolutely be regulated somehow to make it so people in Australia shouldn’t use VPNs.”Murray defended the arrangement of selling content by territory saying “that’s how we get our money” adding: “The people people who say we should get rid of the geo-blocker, it’s just bizarre, as that is how content is sold.”

CJZ produce shows such as House of Hancock, The Checkout, Gruen Planet and Go Back Where You Came From.

“Unless you decide to do a deal with NatGeo, as we have with Bondi Rescue, so it spreads across 70 countries in the one deal, normally you sell it territory-by-territory so the geo-blocker is very important,” Murray explained.

“When we sell to a broadcaster in France they can’t put it on their catch up un-geo-blocked because it defeats the fact we’ve only sold it to France.”

Figures released by finance company Pocketbook to Mumbrella last year suggested around 200,000 Australians were already using VPNs to access Netflix in the US. While it is not illegal to access content this way it is against the company’s own term of conditions user agree to when signing up.

A Netflix spokesperson confirmed this, telling Mumbrella: “The use of VPN to avoid geo-filtering violates our terms and conditions, and we employ industry standard methods to prevent cross-border use of Netflix.”

Murray said the only people who benefit from Australians accessing the US version of the streaming platform is Netflix.

“If someone has sold a show to Netflix in the US, if Netflix picks up an extra 200,000 subscribers in Australia illegally as they have been doing through VPNs, the people who made the show aren’t getting more money,” he said.

“Netflix are getting more money and the VPN supplier are getting more money.”

Murray said Netflix knows this is happening and must be “breaching their own license agreement with their suppliers”.

“As soon as they see an Australian credit card they know it’s an Australian subscriber,” he said.

Murray used US ad funded streaming service Hulu as proof Netflix could easily block users paying via an Australian credit card.

“If you try and sign up for Hulu, even if you’re in America and on an American server, so there’s no VPN, you go in and you have to put your credit card in, they go this is not an American credit card you are not able to sign up for this service,” he explained.

“It’s incredibly simple to stop people from outside the country by accessing a service you have to pay for.

“You can’t stop people who’ve gone to the effort of getting an American credit card,” he admitted. “As soon as you have to use a credit card then Netflix can stop Australians signing up and they should.

“They are the only ones profiting out of that, the content owners are not profiting from Netflix getting more members.”

The Netflix spokesperson rejected the notion that it is as simple as blocking an Australian credit card, saying other methods of payment could allow Australians access to the US platform.

“There are often legitimate uses for Australian credit cards (ex-pats etc). If we employed local credit card crackdown as a method to prevent VPN usage, people can easily turn to PayPal and other forms of payment,” the spokesperson said.

“As we continue licensing and releasing more and more content on a global basis, such as Marvel’s Daredevil, the Netflix original series that launched last week at the same time around the world, the use of VPN will fade.”

Netflix aren’t the only beneficiary of widespread VPN use. The viewing public also benefit. How much cultural engagement is lost by viewers unable to access content or see content while it maintains any cultural capital?

Let’s not outlaw something just because it doesn’t align with business interest.

If VPN use means we don’t get further seasons of Bondi Rescue, that’s a trade-off I’m comfortable to see happen.

Murray is jealous, who wouldn’t be? He has a point, somehow. Anyway, Using unblocking sites are much cheaper, you know. Why would you subscribe for cable tvs if you have VPNs that can unblock places like Netflix. You know, VPNs are cool but if they use it in a different way, then it would be wrong. My folks in Australia really enjoy it. VPNs plus Netflix is the best ever. Pop some pop corns, drink beer, and enjoy the show. They use https://ironsocket.com as their VPN provider, by the way.

Yeah. Let’s block the pathways for people who actually want to PAY for things. Just so we can have some semblance of absolute control over who watches and when.

I understand fighting piracy. But most people using a VPN are jumping through hoops to give you their money.

It really shows a disrespect for your audience, and a profound ignorance of how the internet connected world works. Clinging to the old world method of distribution and release by territories will ultimately just lead you to your demise at the hands of the content creators that understand the digital age, like Netflix and HBO.

The man clearly doesn’t understand that a VPN is an internet protocol – you can’t restrict it’s usage to specifically cater toward the demands of production houses.
Unless you have an intent to change the way every international business securely links with it’s overseas counterparts.

If CJZ are so concerned about getting paid, have they considered putting their stuff on a website and hooking it up to a payment provider, instead of wringing their hands over frustrated consumers turning to technological tools to get around archaic business practices?

Not that it’s reasonable to demand a production company also be in the content distribution business. My point’s that CJZ should recognise that part of their audience is convinced that CJZ, and others like them, are participating in a scam. There’s no technological reason the American Netflix, or Hulu, couldn’t exist in Australia before this year, but it’s in everyone’s best interests to funnel Australians into high-cost, mediocre platforms. It’s deeply suspicious that streaming services were only established in Australia when Netflix announced they were moving into the market, especially when Quickflix most desperately needed support from Australian producers and distributors and never received it.

Appeals to ‘do the right thing’ or ‘support the local industry’ fall on deaf ears when, by their actions, the local industry shows their contempt for the audience.

“guys, why can’t you understand how important our business model is? new consumer-focused technology is eroding our profit margins, why is this legal? guys, why are consumers allowed to have choice and agency in the market????”

The thing that is broken is the territorial sales model, not the legislation around consumer access (which the government has already condoned). I absolutely cannot fathom why a content owner such as CJZ could not do a global licensing deal with a Netflix or similar. After all, wouldn’t it drastically reduce the cost of having to do business with every single country individually?

Netflix are essentially licensed aggregators of content with minimal original content of their own. Something is going to give sooner rather than later if the companies and primary broadcasters they rely on for content continue their revenue and audience decline and create less content or cheaper content. And this decline is very marked this year on free to air TV. The only solution for the incumbents is to turn into multi-platform businesses and many have started this. But it is an unknown world to venture into and sadly quite bleak for small independent Australian owned and controlled content companies such as Cordell Jigsaw. All the other similar Australian companies have now sold out to Hollywood studios or large European companies and now enjoy Australian government subsidies to hold copyrights and revenues offshore. It should never have been allowed but nobody in this government cares.

Licensing content per-country is an outdated concept which pre-dates the Internet. Times have changed and the very platform which enables content producers and distributors to benefit from extremely low cost distributions models just happen to give consumers an edge too. It’s time to get real. It’s not a localized consumer base anymore and anyone stupid enough to think that Government regulation of technology is the way to go should retire now, because they are already over the hill.

As with all vested interest statements relating to territorial restriction, copyright, online retail, gst etc etc .. the real audience for these words are politicians and regulators. The fact that we are reading them is immaterial, they just form part of a submission with referencing for greater authenticity at the appropriate time. No one actually believes this shit

“It should absolutely be regulated somehow to make it so people in Australia shouldn’t use VPNs.”

The whole point of a VPN is so others can’t see what I’m doing or in any way hack into my information while doing it. So there is no way for someone to tell whether I’m using my VPN to access Netflix in the US or to work remotely from the office.

Therefore, the only way to regulate people from using VPNs to access overseas content platforms would be to outlaw VPNs full stop.

Yeah, good luck with that.

Why not instead look at why people are doing this and make the behaviour unnecessary by… oh I don’t know… coming up with a better business model.

Never mind the ludicrous situation of taking an outdated, archaic, anti-consumer business model of licensing content region-by-region and applying it to a global, world-wide delivery platform.

Let’s even ignore the fact that at an inflated subscriber base of VPN users increases the amount of money on the table for these content licensing deals — CJZ can easily negotiate for a higher price on the back of an extra 250k+ users, and Netflix get an extra $2.5mil per month to spend on licensing.

At it’s most basic level — do these people seriously think that alienating, preventing, and/or prosecuting users willing to pay for content from accessing it will drive them back into the arms of a local industry that shows nothing but contempt for its viewers (whether it’s video quality, price, convenience, excessive delays…or all of the above?) instead of their favourite torrent site?

The day I am unable to easily pay for HBO Now/Amazon Prime/Netflix US (all 3 combined *still* cheaper than the cheapest Foxtel package, not to mention much higher quality than Foxtel Go/iView/Quickflix etc) is the day I stop paying, period.

“We can’t change the way we make money, that’s how we make money!” Or you could try a different way of making money, by selling your product to anyone who wants to pay even if that person is in a different territory. I have money, you have a show, why can’t we work this out? Oh that’s right, because you’re still pretending my place of residence is relevant to the transaction.

Poor old Nick Murray, he’s having trouble adjusting to the new world. The internet is global and the audience (or potential audience) of these movies,music etc is also global so when some people can’t access this content because of Geo-Blocking which really is a form of discrimination (or what I call internet apartheid) people resort to VPNs. And remember most of these people ARE WILLING TO PAID.
Netflix understands this and thats why they are making efforts to get their content available globally at the same time as this will reduce the need for VPN usage and also reduce piracy.
CJZ should follow Netflix’s lead and pull down their Geo-Walls and sell direct to the public globally instead of trying to extract as much money as possible on a region by region case.
And who knows CJZ might make a lot more money this way and gain a lot more respect instead of trying to shut people off.

Your not doing a good enough job for me to watch your material only! Work out your customers, work out what they want, use a freemium model to get them involved, charge them for access, stop making your problems other peoples.

If Netflix is the saviour of video consumers all over the planet, then whey do you have to use a VPN, a US account and for similar services a US credit card?

That is because Netflix (apart from its original content) does territorial sales. That is why Foxtel has the rights in Australia and not Netflix. They sold it.

Your ‘saviour’ does exactly the same thing as CJZ.

But if you think this through, what many commenters are saying is “no territorial rights”. Implicitly this means “only global rights”. That is the distribution channel is forced to buy the rights for every country, nook and cranny on the planet just in case someone uses a VPN.

Who can afford to do this? What will the business model look like?

I’d hazard a guess that there would be a handful of businesses that have the acumen to do so. And even less with the finances to do so.

And guess what happens when you have very few suppliers? We’re not talking monopoly, or even duopoly, but it sure would be a narrow oligopoly. And those oligopolists would have deep pockets and fierce legal teams to protect their business.

Just sayin’ … be careful … you might get what you ask for. Buyer’s remorse is such a bitch.

Hulu themselves own several Australian trademarks legally-yet thry don’t use in them in commerce as Hulu hasn’t discussed its intentions of launching locally. Hulu did crack down on VPN use last year a bit.

No JG people are not saying “no territorial rights” people are saying that territories don’t translate directly to the internet and therefore when you have a business model that is so tightly bound to them it’s going to fail when it tries to impose that same strict model when they move online.

Expecting your business rules to work exactly the same between two wildly different environments is insanity and you’re never going to fix it by simply trying to bash one environment into behaving as similarly as possible to your other environment. This goes both ways.

Content by territory is *broken* as a model in the context of the internet. It’s that simple, you can’t fix it with idiocy like banning VPNs because VPNs are simply a symptom, not the actual problem itself.

All that and that’s not even touching on the fact that VPNs are a vital technology to a myriad of other more important use cases.

I agree Steerpike and you were being extremely literal and I explained myself poorly.

But the point remains. Plus I said nothing about banning VPNs.

I am ALL for smashing territorial agreements. They only make sense with ‘physical’ product content (DVDs, cinema, tethered video etc).

It’s just that I haven’t come across a single company that can afford global rights ownership, Any content owner that has those rights quickly on-sells them in order to get the funds to make the content. Backers want something in return for their upfront investment.

So again, I ask the question – what is the funding model likely to be that supports global rights? The only model on the horizon is mega-companies acquiring the content exclusively. You might end up with 5-10 of them in an oligopoly. That means up to 5-10 ‘subscriptions’ (more likely 2-4) as it is highly unlikely that any one of those rights holders will have all the content that the consumer desires.

I think that the ‘great hope’ is a PPV micro-payments system. The user has open-access to any content under the MPS. Their internet provider adds the MPs to the monthly bill and remits what is collected to the rights holder. By micro-payments I mean cents per episode – not dollars per episode. However, I shudder at the thought of the cost of the financial infrastructure. So … be careful of what you wish for.

There is still a buyer with very deep pockets globally prepared to pay big $ in each market for exclusive first run content – and give it away free. It’s called free to air television. They don’t want to buy global rights because they are country specific. Most people quite like this. same with subscription television – it’s country specific and exclusive is very important. Both these markets in total make Netflix and all streaming globally look like a rounding error. Content producers need to maximise their revenue to pay the very expensive costs of making professional television and hence need to deal with FTA and Subscription producers in each country who have the real dollars

If all you streaming addicts are saying you want to receive everything everywhere for your $10 per month … Your asking either for much less content to be made or your going to have to pay much more than $10 per month. That’s the reality of the wider content market …. It doesn’t really matter whether you as consumers want to get everything streamed … Globally a much bigger audience votes with its feet and says they want FTA television and Subscription locally in each market

Good point was also made about if you want Netflix to own all content they’ll be a. Monopoly and then what will happened to your $10 per month

It’s been terrific to read a whole bunch of anonymous comments bagging me for a position where all I have said is Netflix should enforce their own rules or someone else should do it on their behalf. It is a simple position and I would have thought quite fair. Apparently Sony agree too.

Thankyou to the 2 people who have bagged me using their own names. I respect those comments.

Cowards hide behind anonymous comments and, as it turns out, VPNs.

The TV business model involves making shows for people who pay for them. They are then on-sold to other networks and operators who also pay up front. In the anonymous consumer world, no one pays for anything. That’s not a business model people.

I think it’s an intriguing theory that can be expanded into other content areas if only because there are so many clear examples of it happening all over the web. Kickstarter and Indigogo are two obvious examples. Patreon and the Twitch streaming platform are others. I’m not saying that these are solutions, I’m just saying that the Oligarchy model is not the only way for content to reach a very, very large audience.

The TV business model *does not work* online because online is not TV. That’s the most basic concept you need to grasp before entering the conversation. Just because they both look similar on a screen does not mean that your business model translates between them. Different business models are required for different environments as I stressed above. Obviously there are successful online models – most of them even based around anonymity (because the Internet is stateless http://en.wikipedia.org/wiki/Stateless_protocol).

The failure of your business model translating directly into the environment you’re trying to move into is *not the fault of the new environment*. It is not required to bend and stretch its own fundamental structure to bolster failures in your model just because it happens to cost you money. Adapt your old business to the new model or fail. The millions of people succeeding online already couldn’t really care less which option you choose.

Penguin Alert, I think that Nick is saying that HE does not have global rights so CAN’T monetise them. In order to get a programme made in the first place the rights have to be broken up into regions and sold individually to get the funds up-front to make the programme.

Nick you sound just like the retailers who are squealing to the government about putting gst on overseas purchases or Coles and Woolworths complaining about Costco and Aldi. It’s funny how Australian businesses all react the same way when there is threat to their bloated profits from competition who simply want to provide Australians a better product, with a better service at a cheaper price. You will lose, so you better either up your game and start producing TV people want to watch or sit back and watch your business go under.

Nick Murray’s comment shows exactly what the problem is. As others have said… He is simply wanting to protect an outdated businesses model of territorial markets rather than adapt to delivering to a global market.

This is a problem that is endemic in the entertainment industry. It’s the old way of doing business before mass data distribution via the internet (look up Big Data) became possible.

You need to take control of you distribution model. When you create a show what is wrong with putting it up for sale on the internet so consumers can purchase an episode or a season, download it, and play it using any device they want (e.g. an mp4 file so it’s not locked to a specific system like iTunes or Google Play)? You do realise it’s starting to become very common for people to have a computer (aka Home Theatre PC) or NAS connected to their TV right? So they can play files on their TV using a DLNA player?

If you didn’t understand a word of the last paragraph then that should be a sign to you that you need to do some research and consider adapting to the new environment.

That is RARELY the case. They will own a proportion of them as a result of either creating them or making them. For example the production company may invest in the show as well as make it. That proportion may be as low as 5%, and it would be rare to be more than one-third.

In essence that means that the CAN’T “put it up for sale on the internet so consumers can purchase an episode or a season, download it, and play it using any device they want”. Only the owners can do that. The primary owners are the people who stumped up the millions to make the show in the first place,

In attacking Nick Murray and CJZ you are merely showing how little you understand the financial side of file, TV and video production. If you want to have a (justifiable) whinge then attack the money-men and not the producers.

I’m sure than Nick would LOVE to be able to put CJZ shows up on the ‘net for streaming and downloading and reap those dollars. But the people who forked over the big bucks up-front have the rights in order to re-coup their investment and it’s up to them and not the producer.

I totally agree we need simplified, more immediate access to produced content. I also look forward to the day when I can watch anything, anywhere, anyhow.

My previous post shows that even the most successful KickStarter with Veronica Mars still didn’t cut it financially. It shows that crowd-sourcing (to-date) simply doesn’t raise the necessary funds to pay the labour bill to make it. Actors, writers, directors, producers, crews, editors, score-writers etc are not going to work and hope that a year or two down the track when the show is finished that then will then get paid. Would you? No! So why expect people working in film, TV and video to do so? Even down the track they may only get a proportion of what their labour was worth. On the flip side if it is a huge success they may get more than that – but who will take that risk when they have mortgages and food bills to pay.

So my challenge to all those saying that Nick et. al. need to adapt to the new environment … I’d be extremely interested in how this Brave New World you speak of will provide up-front funding in order to pay the people on the studio floor to live day-to-day in order to satiate your appetite to view the latest hit show from the US concurrently and not have to wait a few hours, a few weeks or a few months.

Yes the current model is broken. Blind Freddy can see that. But don’t stand on the sidelines and throw rocks … come up with financially viable solutions to produce such content better than exist currently. Digerati have been complaining for a decade – still no viable solutions with KickStarter being the closest but still not good enough.

He can’t monetise global IP rights, but I’d be very surprised if he’s not taking advantage of “cloud” (utility computing) services, SaaS or virtualised servers in ways that best suit his budget and requirements. I expect some of these are even based overseas.

If I said, “They should outlaw people buying cheap servers hosted overseas, because I sell servers hosted in Australia”, you’d tell me I was a fucking idiot and that you’d spend your money with whomever gives you the best deal and meets your needs.

No? What about virtualised servers? Should they be outlawed to suit me, the guy who sells physical servers at greater cost and reduced efficiency?

Totally agree with JG. Easy to throw rocks from the sidelines with little understanding of the model or alternatives especially about those putting money up front so they get a reasonable return on investment as well as providing the money needed pay the crews and creatives and get residuals for actors and writers. Sorry the consumer is at the end of this chain. Instead of whining about your right and entitlement to all content, think of something fair so production companies like CJZ can continue to create product but importantly employment for thousands of freelance professionals.

The fallacy of so many of the worthy arguments is that while creators and investors have the absolute right to set the price and value of their work, telling the consumer that they are wrong/should come up with the solution when the majority of consumers clearly have a different set of expectations is counterproductive… EVEN WHEN THE CONSUMER IS WRONG.

You don’t change someones patterns of behaviour or mind by telling them what to do, and punitive measures have a pretty crap track record of doing the same. Yes I/they don’t have an answer to the diminishing returns for traditional content creators, nor should we. Identifying the problem doesn’t make you beholden to providing the solution as many in the industry seem to think.

You want to change the end user? Give them something more than criticism of their behaviour. Find a way to make them buy into your argument beyond arguments like ‘if you don’t pay for it it won’t get made’.

The world of absolutes does not exist. Where there is an audience there will be content, and business will find a way to monetise that. The sad thing is it might not be yours, and that many talented people might not have the same jobs or careers, but stop conflating the production of content in its current form with the loss of content and/or culture. It serves no purpose other than to alienate the consumer .

I’ll also add that a lot of the content (even relatively recent stuff) was made based on contractual agreements ensuring distribution zones to guarantors of the production funds, as many of these big projects may take up to five years to see the light of day.

It would of course be illegal for producers such as Nick Murray to break such a contract as he would surely end up in gaol.

Of course it is also illegal to incite someone to break a contract, or to put them under duress to break a contract, or to engage in tortious interference.

I thought the whole point of having a VPN was so that no one could tell where in the world you were actually accessing the net from? So how does this bloke propose they block people here in Australia from having one when they can’t pinpoint that you actually even in Aus in the first place?

The point isn’t that we are ignorant, I’d say most of us probably work with content in some from or other. I’ve worked in content acquisition in publishing globally for about 5 years, and the same points are raised there.

The path to the consumer has changed, and just like other media before, we need to find a way to transition profitably or kiss goodbye to our business. It’s not about GOT or whatever the headline content is, or for that matter our sensitive egos.

We’re not ignorant, we just think that your business model that relies on artificial barriers and regional pricing is outdated bullshit.

If I want to buy a legitimate product, and a legitimate rights-holder wants to sell it to me for 1/2 the price of some other rights-holder, what incentive do I have to pay more? Why do I care about their agreements with their suppliers?